Print revenues at Local World fell 8pc to £131.5m last year but adjusted profits were up 12pc to £43.6m off the back of increased revenue from the group’s websites, up 21pc to £24.6m.

Speaking on Sky News recently, Local World boss David Montgomery hinted that a deal was in the works. “We need a radical new operating model and that is now in progress and we will be unleashing that over the next few months,” he said.

Analysts at Liberum have said that the deal would be a “significant positive for Trinity”. Shares in the media group rose nearly 7pc on Monday morning.

Industry consolidation could secure the future of local papers Photo: GETTY

“While cost savings might be less than appear at first sight, it could still lead to significantly higher earnings,” the note stated. “While phone hacking issues still overhang the shares, a Local World deal would be a major positive and we reiterate our ‘buy’ recommendation.”

While Local World does not own its own printing presses, some restructuring could result in savings on staff wages, Liberum said.

Trinity Mirror currently holds a 20pc stake in Local World.

The Iliffe family, which runs a media empire, owns 21pc of the company. Iliffe News & Media, which owns 39 titles, was subsumed into Local World when the family took a stake three years ago.

It is understood that the family has opposed the deal and may retain some of these titles should the takeover go ahead.

Other backers include Lord Ashcroft’s Artefact Group and the hedge fund boss Crispin Odey, who hold 11.5pc and less than 5pc respectively.

Former boss at the Mirror Group, Mr Montgomery, who holds a 5pc stake in Local World, could pocket as much as £10m from the takeover, which could be blocked by regulators.

A spokesperson for Trinity Mirror said that the company was unable to comment further under Takeover Panel rules.